Last week, Commander Karen Baxter, Police National Coordinator for Economic Crime, told The Daily Telegraph of her plans to crack down on money laundering.
In particular she zeroed-in on accountants and lawyers that she described as “complicit” in, or “complacent” over money laundering.
Among her plans to tackle the issue are covert investigative tactics, the recruitment of a new kind of ‘cyber investigator’ and a whole-system approach to tackle fraud.
The interview highlights the toughening stance which authorities in the UK and beyond are taking on financial and legal professions in an attempt to eradicate money laundering.
In this article, we’ll take a look at what has prompted this new approach, the recent legislation which lawyers and accountants need to be aware of, and how Red Flag Alert can help you remain compliant.
Growing Understanding of Money Laundering
Money laundering underpins almost all organised crime and can only take place if certain professions fail to report suspicious activity.
There are several laws in place aimed at ensuring this reporting takes place; however, a recent report from the National Crime Agency (NCA) has revealed that the scale of money laundering in the UK has been underestimated.
The NCA now says that £100 billion in money laundering impacts the UK economy each year and costs the country around £24 billion.
Furthermore, there is a growing recognition of the damaging wider impact that this illegal activity has on communities and people’s lives.
This combination of factors has triggered the authorities in the UK and EU to do more to tackle the issue by targeting specific professions with a range of measures.
In terms of soft tactics, the Home Office has been working with the National Crime Agency and the accounting, legal and property sectors on the Flag It Up campaign in order to promote best practice in anti-money laundering compliance and reporting suspicious activity.
However, new legislation is also being introduced that will put more stringent risk monitoring requirements on accountants, lawyers and property agents.
The international efforts to tackle corruption are considerable. Anti-Money Laundering (AML) policies are driven by the intergovernmental Financial Action Task Force (FATF), and EU and UK lawmakers have been busy putting updated legislation in place. Since 2017 we’ve had:
- The Fourth Anti-Money Laundering Directive (AMLD4).
- The Money Laundering, Terrorist Financing and Transfer of Funds Regulations.
- Criminal Finances Act.
Now, the Fifth Anti-Money Laundering Directive (AMLD5) is expected to be incorporated into UK legislation in early 2020.
Among the requirements are that all accountants will need to report any beneficial ownership discrepancies which they spot during due diligence, self-regulatory bodies will need to publish an annual report about their compliance monitoring and detected AML breaches, and public bodies will be required to publish information on AML risks which they have identified.
What Are The Current Requirements?
If a business fails to meet these obligations, then civil penalties or criminal sanctions can be imposed. Those who are indicted could lose their licence, receive a fine or even face jail.
An example of a recent minor infraction is the original owners of online property agency emoov. They were fined £3,721 for not having the correct policies, controls and procedures in place and for failures in conducting due diligence.
A more serious example is that of David Pape, an accountant based in Glossop, Manchester, who was jailed for six and a half years after helping convicted drug dealers to launder money and commit mortgage fraud.
Remain Vigilant With Red Flag Alert
At first glance, it’s a dizzying raft of legislation to absorb and implement – especially for an SME. Principally, the regulations place a responsibility on businesses to be aware of whom they’re working with, making them accountable for any connection to money laundering or terrorist financing, intentional or accidental.
To help businesses navigate these regulations we’ve developed an AML service to give businesses assurance that they’re compliant. The AML service was developed in conjunction with Begbies Traynor plc and GB Group plc – we’re confident that it’s the most comprehensive solution on the market in the UK.
- Full range of risk level checking.
- Unbeatable match rates.
- ID verification.
- Enhanced due diligence.
- Sanctions and PEPs real-time screening.
- Monitoring alerts.
- Simple interface.
- Secure audit trail.
You can add this service to your current Red Flag Alert subscription with no set-up – and our expert team are available to make sure you’re heading in the right direction.
The risk posed by money laundering to both your livelihood and your reputation can be intimidating; Red Flag Alert provides you with peace of mind that your business will remain compliant and on the right side of the law.
To speak to one of our team in more detail about how to set up this feature, please get in touch with Geoff Charlwood on firstname.lastname@example.org or 0344 412 6699.